Record Retention Guide

Storing Tax and Financial Records: How Long Is Long Enough?

Proper record retention is essential for tax compliance, business operations, and personal financial protection. The following guidelines outline recommended retention periods for both business and personal records, along with special circumstances to consider.

General Retention Timeframes

Business Records to Keep:

  • 1 Year

  • 3 Years

  • 6 Years

  • Forever

Personal Records to Keep:

  • 1 Year

  • 3 Years

  • 6 Years

  • Forever

Special Circumstances: Backup and Electronic Storage

Taxpayers are encouraged to create a backup set of important records and store them electronically. Maintaining backup copies of documents such as bank statements, tax returns, and insurance policies is easier than ever due to the availability of electronic statements and online access provided by many financial institutions.

Paper documents can be scanned and converted into digital format. Once converted, records may be saved to a backup storage device such as an external hard drive or burned onto a CD or DVD (be sure to label the media clearly).

Online backup services should also be considered, as they provide the highest level of protection. Online backups store files in geographically separate regions of the country, ensuring records remain safe in the event of hurricanes or other natural disasters.

⚠️ Caution: Identity Theft Protection

Identity theft is a serious and ongoing concern. Once tax records, financial statements, or other documents containing personal information are no longer required to be retained, they should be disposed of securely. These records should be shredded, not simply thrown away in the trash.

Business Documents Retention Schedule

Business Documents to Keep for One Year

  • Correspondence with customers and vendors

  • Duplicate deposit slips

  • Purchase orders (excluding Purchasing Department copies)

  • Receiving sheets

  • Requisitions

  • Stenographer’s notebooks

  • Stockroom withdrawal forms

Business Documents to Keep for Three Years

  • Employee personnel records (after termination)

  • Employment applications

  • Expired insurance policies

  • General correspondence

  • Internal audit reports

  • Internal reports

  • Petty cash vouchers

  • Physical inventory tags

  • Savings bond registration records of employees

  • Time cards for hourly employees

Business Documents to Keep for Six* Years

  • Accident reports and claims

  • Accounts payable ledgers and schedules

  • Accounts receivable ledgers and schedules

  • Bank statements and reconciliations

  • Cancelled checks

  • Cancelled stock and bond certificates

  • Employment tax records

  • Expense analysis and expense distribution schedules

  • Expired contracts and leases

  • Expired option records

  • Inventories of products, materials, and supplies

  • Invoices to customers

  • Notes receivable ledgers and schedules

  • Payroll records and summaries, including payments to pensioners

  • Plant cost ledgers

  • Purchasing Department copies of purchase orders

  • Sales records

  • Subsidiary ledgers

  • Time books

  • Travel and entertainment records

  • Vouchers for payments to vendors, employees, etc.

  • Voucher registers and schedules

*Records related to a bad debt deduction or a loss claimed for worthless securities should be kept for 7 years.

Business Records to Keep Forever

Although federal guidelines do not require records to be retained indefinitely, there are many situations where permanent retention is advisable.

  • Audit reports from CPAs or accountants

  • Cancelled checks for important payments (especially tax payments)

  • Cash books and charts of accounts

  • Contracts and leases currently in effect

  • Corporate documents (incorporation papers, charter, by-laws, etc.)

  • Documents substantiating fixed asset additions

  • Deeds

  • Depreciation schedules

  • Year-end financial statements

  • General and private ledgers and year-end trial balances

  • Insurance records, including current accident reports, claims, and policies

  • Investment trade confirmations

  • IRS revenue agents’ reports

  • Journals

  • Legal records, correspondence, and other important matters

  • Minute books of directors and stockholders

  • Mortgages and bills of sale

  • Property appraisals by outside appraisers

  • Property records

  • Retirement and pension records

  • Tax returns and worksheets

  • Trademark and patent registrations

Personal Documents Retention Schedule

Personal Documents to Keep for One Year

  • Bank statements

  • Paycheck stubs (reconcile with W-2 forms)

  • Cancelled checks

  • Monthly and quarterly mutual fund and retirement contribution statements (reconcile with year-end statement)

Personal Documents to Keep for Three Years

  • Credit card statements

  • Medical bills (for potential insurance disputes)

  • Utility records

  • Expired insurance policies

Personal Documents to Keep for Six* Years

  • Supporting documents for tax returns

  • Accident reports and claims

  • Medical bills (if tax-related)

  • Property records and improvement receipts

  • Sales receipts

  • Wage garnishments

  • Other tax-related bills

*Records related to a bad debt deduction or a loss claimed for worthless securities should be kept for 7 years.

Personal Records to Keep Forever

  • CPA audit reports

  • Legal records

  • Important correspondence

  • Income tax returns

  • Income tax payment checks

  • Investment trade confirmations

  • Retirement and pension records

Special Retention Situations

  • Car records — keep until the car is sold

  • Credit card receipts — keep with the corresponding credit card statement

  • Insurance policies — keep for the life of the policy

  • Mortgages, deeds, and leases — keep 6 years beyond the agreement

  • Pay stubs — keep until reconciled with the W-2

  • Property records and improvement receipts — keep until the property is sold

  • Sales receipts — keep for the life of the warranty

  • Stock and bond records — keep for 6 years after selling

  • Warranties and instruction manuals — keep for the life of the product

  • Other bills — keep until payment is verified on the next bill

  • Depreciation schedules and other capital asset records — keep for 3 years after the tax life of the asset